TY - JOUR
T1 - The sealed-bid mechanism
T2 - An experimental study
AU - Radner, Roy
AU - Schotter, Andrew
N1 - Funding Information:
* The authors would like to thank Ken Rogoza for his valuable research assistance on this paper. The research presented in this paper was made possible by a grant from the C. V. Starr Center for Applied Economics. The views expressed here are those of the authors, and do not necessarily reflect the views AT & T Bell Laboratories.
PY - 1989/6
Y1 - 1989/6
N2 - This paper presents the results of a set of experiments performed to test the properties of a bargaining mechanism (called the sealed-bid mechanism) used to structure bargaining under incomplete information. Our results indicate that the mechanism performs quite well. When using it, experimental subjects are able to capture a large portion of the potential gains from trade. In addition, the behavior of the subjects is qualitatively consistent with one particular equilibrium of the mechanism, namely, the one with linear bidding strategies. Finally, an experiment performed allowing experienced subjects to repeat the experiment for relatively large numbers of rounds, suggests that, with enough experience, other equilibria may appear, in which the subjects use "step function" strategies.
AB - This paper presents the results of a set of experiments performed to test the properties of a bargaining mechanism (called the sealed-bid mechanism) used to structure bargaining under incomplete information. Our results indicate that the mechanism performs quite well. When using it, experimental subjects are able to capture a large portion of the potential gains from trade. In addition, the behavior of the subjects is qualitatively consistent with one particular equilibrium of the mechanism, namely, the one with linear bidding strategies. Finally, an experiment performed allowing experienced subjects to repeat the experiment for relatively large numbers of rounds, suggests that, with enough experience, other equilibria may appear, in which the subjects use "step function" strategies.
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U2 - 10.1016/0022-0531(89)90124-5
DO - 10.1016/0022-0531(89)90124-5
M3 - Article
AN - SCOPUS:0001632943
SN - 0022-0531
VL - 48
SP - 179
EP - 220
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 1
ER -